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Bitter pills for drug companies

1Bureau of Investigative Journalism, City University, London EC1V7HD, UK (www.tbij.com)

melanienewman{at}tbij.com

After criticism that massive fines are failing to dissuade drug companies from engaging in fraudulent business practices, the US government is turning to more radical enforcement measures. Melanie Newman reports

It was the biggest fine ever imposed in America, the largest healthcare fraud settlement in Department of Justice history, and the largest civil fraud settlement ever paid by a drug company. It was, said Kevin Perkins, assistant director of the Federal Bureau of Investigation’s criminal investigative division “a clear message” to drug companies that they would not be allowed to “peddle their prescriptions or products for uses beyond their intended—and federal government-approved—purpose.”

Pfizer had just agreed to be fined a record $2.3bn (£1.5bn; €1.8bn) for illegally promoting four drugs—valdecoxib, ziprasidone, linezolid, and pregabalin—for uses that the US Food and Drug Administration had not approved.1 The company was also accused of paying incentives or “kickbacks” to doctors to prescribe the drugs, a charge that was also resolved under the terms of the settlement. Both practices are considered fraudulent in the US, because they mean government healthcare programmes are paying for drugs that may not work effectively or are unnecessary.

On the day after the fine was announced, the New York Times pointed out that $2.3bn amounted to less than three weeks of Pfizer’s sales.2 And US authorities admitted that Pfizer was illegally marketing its drugs at the same time as it was negotiating settlement terms for a similar, previous offence.

Repeat offending and unenforceable penalties

In 2004 Pfizer agreed to pay $420m to settle charges that its newly acquired subsidiary, Warner-Lambert, had marketed an epilepsy drug, gabapentin, for unapproved purposes. The company’s lawyers assured prosecutors that Pfizer and all its subsidiaries would cease this practice immediately. But at the same time its sales representatives were marketing the anti-inflammatory drug valdecoxib, which was approved for …